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Shareholder loan

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Newbie

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If a shareholder loans an amount to the company, what interest rate should the company use?

How long can the company take to pay back his interest and principal. I believe the interest is going to be income in the hands of the shareholder/employee and deductions for the company. Should this be done through his pay to work out the tax payable on it or is there any specific form to be filled for this sort of arrangement. Appreciate your advise.

     

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ATO Certified Response

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Hi @BINDU,

 

Welcome to our Community! @DucanS has provided helpful information. You can find further information about interest rates on our website.  Alternatively you may wish to contact a registered tax agent.

 

I hope this helps, JodieM.

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Devotee Registered Tax Practitioner

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@BINDU

 

As with your previous question, consult with a Tax Agent.

 

From  my experience, a loan from a Director/Shareholder may be interest free.

 

Your Tax Agent will advise on this and the implementation of the Loan so as to protect the Director/Shareholder in case of company windup.

 

Duncan

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Most helpful response

ATO Certified Response

Community Support

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Hi @BINDU,

 

Welcome to our Community! @DucanS has provided helpful information. You can find further information about interest rates on our website.  Alternatively you may wish to contact a registered tax agent.

 

I hope this helps, JodieM.